- Positive Free Cash Flow for Q4 2017 with US$8.0 million in cash exiting 2017
- Record tonnes milled in December; production increased by 81% since January 2017
- Guidance for 2018: Free Cash Flow of US$14-$20 million; EBITDA of US$32-$40 million
TORONTO, Jan. 11, 2018 (GLOBE NEWSWIRE) -- Ascendant Resources Inc. (TSX:ASND) (OTCQX:ASDRF) (FRA:2D9) ("Ascendant" or the "Company”) is delighted to report its first quarter of free cash flow at its El Mochito mine in Honduras with $8.0 million in cash exiting 2017. The Company is also pleased to announce fourth quarter and full year 2017 production results, with record monthly production achieved in December. With the turnaround of the El Mochito mine now definitively complete, the financial and operational success achieved in 2017 provides management with the confidence to deliver robust 2018 guidance as the El Mochito mine begins a period of sustained profitable production.
2017 Operational Performance – Guidance Exceeded at Record Throughput
Total contained metal production for the 2017 calendar year was 66.1 million pounds of zinc equivalent1 exceeding the Company’s guidance of 65.8 million pounds. During the fourth quarter, contained zinc equivalent metal production was 19.6 million pounds, up by 12% from the third quarter.
Milled production for the month of December was 69,578 tonnes (or an average of 2,399 tonnes per operating day). This represents the strongest month of production achieved at the El Mochito mine during 2017, and an overall increase in production of 81% since January 2017, a significant accomplishment only a year after acquiring the operation. Milled production for the fourth quarter was 198,355 tonnes (or an average of 2,241 tonnes per operating day) representing a 13% improvement over third quarter production of 176,037 tonnes (or an average of 1,934 tonnes per operating day).
Operations have continued to benefit from the ongoing improvement programs within the operating environment and the introduction of new mining equipment. Processing recoveries remained relatively consistent throughout the year and are expected to remain consistent going forward. Ore grades are expected to improve in 2018 as production shift towards higher grade areas within the mine, namely Esperanza and Nueva Este, and with the contribution from conventional mining activities within smaller but higher-grade ore zones. In addition, the remainder of the new mining equipment is expected to be fully deployed by mid-2018 supporting higher equipment availability for maintaining current production rates.
| 1 This figure was calculated on a spot metal price basis. Using the metal price assumptions as in the 2017 guidance press release dated April 2017 of US$2,744/t (US$1.25/lb) Zinc, US$2,289/t (US$1.04/lb) Lead and US$17.50/oz Silver, contained metal produced for 2017 was 67.0Mlbs zinc equivalent pounds. |
Operational performance for fourth quarter and full year 2017 is provided in the table below:
| Units | October | November | December | Q4/17 | ||||
| Ore Milled | tonnes | 64,449 | 64,327 | 69,578 | 198,355 | |||
| Ore Milled | tonnes per day | 2,184 | 2,144 | 2,399 | 2,241 | |||
| Working Days | 29.5 | 30 | 29 | 89 | ||||
| Mill Head Grade | ||||||||
| Average Zn grade | % | 3.72% | 3.84% | 3.41% | 3.65% | |||
| Average Pb grade | % | 1.47% | 1.59% | 1.19% | 1.41% | |||
| Average Silver Grade | g/t | 35.7 | 38.0 | 29.00 | 34.1 | |||
| ZnEq Head Grade | % | 5.44% | 5.70% | 4.82% | 5.31% | |||
| Average Recoveries | ||||||||
| Zinc | % | 88.6% | 88.6% | 88.3% | 88.5% | |||
| Lead | % | 72.4% | 76.6% | 74.7% | 74.6% | |||
| Silver | % | 83.3% | 77.0% | 72.8% | 77.6% | |||
| Contained Metal Production | ||||||||
| Zinc | tonnes | 2,127 | 2,186 | 2,098 | 6,411 | |||
| Lead | tonnes | 665 | 782 | 619 | 2,066 | |||
| Silver | ozs | 61,595 | 60,048 | 47,395 | 169,039 | |||
| Zinc equivalent metal | tonnes | 2,955 | 3,099 | 2,824 | 8,878 | |||
| Zinc equivalent metal | MM lbs | 6,514,109 | 6,832,496 | 6,226,527 | 19,573,132 | |||
| Units | Q3/17 | Q2/17 | Q1/17 | Year | Year Guidance |
Variance | |||||||
| Ore Milled | tonnes | 176,037 | 150,785 | 131,115 | 656,292 | 663,475 | -1% | ||||||
| Ore Milled | tonnes per day | 1,934 | 1,733 | 1,619 | 1,889 | 1,923 | |||||||
| Working Days | 91 | 87 | 81 | 347.5 | 345 | ||||||||
| Mill Head Grade | |||||||||||||
| Average Zn grade | % | 3.51% | 3.36% | 3.43% | 3.50% | 3.50% | - | ||||||
| Average Pb grade | % | 1.46% | 1.34% | 1.33% | 1.39% | 1.50% | -7% | ||||||
| Average Silver Grade | g/t | 38.3 | 48.9 | 52.1 | 43.00 | 48.0 | -10% | ||||||
| ZnEq Head Grade | % | 5.36% | 5.50% | 5.56% | 5.63% | 5.73% | -2% | ||||||
| Average Recoveries | |||||||||||||
| Zinc | % | 88.8% | 88.9% | 89.8% | 88.9% | 85.1% | 4% | ||||||
| Lead | % | 73.7% | 72.3% | 76.9% | 74.3% | 66.6% | 12% | ||||||
| Silver | % | 78.0% | 79.3% | 78.8% | 77.7% | 68.9% | 13% | ||||||
| Contained Metal Production | |||||||||||||
| Zinc | tonnes | 5,488 | 4,505 | 4,032 | 20,436 | 19,986 | 2% | ||||||
| Lead | tonnes | 1,894 | 1,459 | 1,341 | 6,760 | 6,468 | 5% | ||||||
| Silver | ozs | 168,181 | 188,245 | 173,041 | 698,505 | 705,520 | -1% | ||||||
| Zinc equivalent metal | tonnes | 7,936 | 6,975 | 6,201 | 29,990 | 29,843 | 0.5% | ||||||
| Zinc equivalent metal | MM lbs | 17,496,673 | 15,376,986 | 13,671,410 | 66,118,201 | 65,793,000 | 0.5% | ||||||
2018 Production and Cost Guidance – Strong Production Supporting Meaningful Free Cash Flow
The operational and financial milestones achieved in 2017 have positioned the Company for an exceptional 2018, with an expected 41%-65% increase in contained metal production as compared to 2017. Over the past year, the Company has focused on tonnage growth, correcting existing deficiencies as well as reinvigorating and training the work force, culminating in a ramp up in profitability and achieving the Company’s first quarter of positive free cash flow.
In 2018, the Company plans to continue to build on this solid operating performance while focusing on maximizing free cash flow and long-term profitability during a period of continued stable operations. During 2018 management expects to maintain production rates of between 2,200 – 2,400 tonnes per day while increasing mill feed grades and reducing costs.
Capital expenditures include development costs, the balance of mobile equipment purchases as well as exploration expenditures as the Company continues to focus on expanding the overall size and grade of the resource base to support the Company’s long-term growth objectives. Operational updates will be provided on a quarterly basis going forward.
2018 Production Guidance is provided in the table below:
(all financial figures in $US)
| Contained Metals in Concentrate | |
| Zinc equivalent metal | 93 – 109 million lbs |
| Zinc | 65 – 73 million lbs |
| Lead | 24 – 28 million lbs |
| Silver | 900,000 – 1,200,000 ozs |
| Direct Operating Costs | $70 – $80 / tonne |
| Capital Expenditure | $16 – $18 million |
| Financial Metrics | |
| Adjusted EBITDA2 | $32 –$ 40 million |
| Free Cash Flow | $14 – $20 million |
| All figures in the above table are based on the following metal price assumptions; $1.50/lb zinc, $1.10/lb lead and $18/oz silver. |
2017 Achievements at El Mochito a Yardstick for Success within the Mining Industry
Ascendant acquired the El Mochito mine in December 2016, almost 70 years into continued operations by several operators, many of whom had significant financial means. Within less than a year, Ascendant’s operating team has taken what was an undercapitalized and underperforming mine and turned it into a free cash-flow generating operation with record production rates, well above those of previous operators. This successful and timely turnaround is a major feat for a mine of any size or age. Using the talents and determination of the Company’s team, El Mochito delivered an 81% increase in production for 2017 and is now a mine that can sustain and even improve on current throughput rates while providing strong financial performance for years to come.
Exiting the year, Ascendant has a strong working capital position with a cash balance of $8.0 million and substantial value in concentrate inventories, which are expected to be shipped on a monthly basis. This working capital position and the projected cash flows for 2018 provide the Company with the financial strength needed to fully fund all planned, development, exploration and capital expenditures. The work and subsequent success of the team this year indicates there is tremendous long-term opportunity remaining at El Mochito yet to be fully harnessed.
The Company continues to target the completion of a new NI 43-101 mineral resource report by the second quarter of 2018 which is expected to highlight the significant resource potential at El Mochito. Exploration results published in April and October 2017 highlight exciting grades and intercepts and will contribute to the report in the second quarter. The Company is also undertaking a review of various long-term optimization programs to support a lower cost structure and higher sustainable production rates which should be completed by mid year.
President and CEO Chris Buncic stated: “During the past year, we have been successful in completely transforming the El Mochito mine into a cash flow positive operation through rigorous optimization programs at all levels in the Company. We were able to deliver on our goal of restoring production levels beyond prior highs and, as a result, successfully exceeded our annual production target, a testament to the hard work and ability of our team. With a year of strong operational success behind us, El Mochito has proven capable to be a cornerstone asset with great opportunity to generate significant free cash flows for years to come. It is difficult to effectively stress what an incredible accomplishment we have achieved this year.”
He continued, “In 2018, Ascendant will continue to build on the successes of 2017 as we pursue further operational improvements, increasing head grade to the mill leading to improved value per tonnes milled while improving the contribution margin through a significant focus on cost cutting to drive profitability. Exploration work to-date has demonstrated the potential for greater tonnage at higher grades, and we look forward to providing a resource update in the second quarter.”
| 2Adjusted EBITDA is a Non-IFRS measure and is calculated by considering the Company's earnings before interest payments, tax, depreciation and amortization, adjusted for net foreign exchange expenses. |
About Ascendant Resources Inc.
Ascendant is a Toronto-based mining company focused on its 100%-owned producing El Mochito zinc, silver and lead mine in west-central Honduras, which has been in production since 1948. After acquiring the mine in December 2016, Ascendant implemented a rigorous optimization program aimed at restoring the historic potential of the El Mochito mine. In 2017, the Company successfully completed the operational turnaround it set out to achieve with sustained production at record levels and profitability restored. The Company now remains focused on cost reduction and further operational improvements to drive robust free cash flow in 2018 and beyond. Ascendant is also focused on expanding and upgrading known resources through extensive exploration work for near-term growth. With a significant land package of 11,000 hectares and an abundance of historical data there are several regional targets providing longer term exploration upside which could lead to further resource growth. The Company is also engaged in the evaluation of producing and development stage mineral resource opportunities, on an ongoing basis. The Company's common shares are principally listed on the Toronto Stock Exchange under the symbol "ASND". For more information on Ascendant Resources, please visit our website at www.ascendantresources.com.
